Full-Text Articles in Law

Competition, Consumer Welfare, And The Social Cost Of Monopoly, Yoon-Ho Alex Lee

Student Scholarship Papers

Conventional deadweight loss measures of the social cost of monopoly ignore, among other things, the social cost of inducing competition and thus cannot accurately capture the loss in social welfare. In this Article, we suggest an alternative method of measuring the social cost of monopoly. Using elements of general equilibrium theory, we propose a social cost metric where the benchmark is the Pareto optimal state of the economy that uses the least amount of resources, consistent with consumers’ utility levels in the monopolized state. Since the primary goal of antitrust policy is the enhancement of consumer welfare, the proper benchmark ...